Franchise Brands plc Annual Report and Accounts 2018 37 Strategic Report Financial Statements Governance The Board is responsible to the Company’s shareholders for: • Setting the Group’s strategy; • Maintaining the policy and decision-making process through which the strategy is implemented; • Checking that necessary financial and human resources are in place to meet the strategic aims of the Group; • Providing entrepreneurial leadership within a framework of good governance and sound risk management; • Monitoring performance against key financial and non-financial indicators; • Overseeing the systems of risk management and internal control; and • Setting values and standards in corporate governance matters. The role of the Non-executive Directors is to: • Challenge constructively and help develop proposals on strategy; • Satisfy themselves as to the integrity of the financial reporting systems and the information they provide; • Satisfy themselves as to the robustness of the internal controls; • Ensure that the systems of risk management are robust and defensible; and • Review management performance and the reporting of such performance to shareholders. All Directors receive regular and timely information on the Group’s operational and financial performance. Detailed strategic Board papers are sent out in advance of Board meetings, and the Board receive the monthly management accounts detailing the performance of our brands. The Directors’ contracts provide that they must each devote such time to the Company as is required to fulfil their duties. QCA PRINCIPLE 6 Ensure Directors have necessary, up-to-date skills Having Directors drawn from a range of backgrounds, with a cumulatively wide range of relevant skills and experiences, helps us to take decisions in the interests of all shareholders and which take into account the interests of a wide range of stakeholders. Details of the skills and experience of the Board, which cover sector, financial and public markets skills and experience, can be found on pages 32 and 33. Where new Board appointments are considered the search for candidates is conducted, and appointments are made, on merit, against objective criteria and with due regard for the benefits of diversity on the Board, including gender. The Board recognises that as the Group evolves, the mix of skills and experience required on the Board will change, and Board composition will need to evolve to reflect this change, with due regard for the benefits of diversity on the Board, including gender. Directors are provided with access to the Company’s Nominated Advisor who provide briefings on necessary legislation and regulations from time to time. Directors are supported to ensure their skills remain up to date, including training courses and continuing professional development. QCA PRINCIPLE 7 Evaluate Board Performance A Board performance self-evaluation was undertaken in November 2018, the results of which have been discussed by the Board. Each Director was invited to complete a questionnaire providing a quantitative rating and justifying narrative on ten strategically aligned questions, with two further questions to identify any improvement opportunities. Overall, the Board felt that it was functioning effectively, with a good balance and blend of skills and experience around the Board table and meetings that were held in a constructive spirit. The evaluation identified two opportunities to enhance the Board’s effectiveness. One was to ensure that its meeting agendas and discussions focussed on strategic considerations, with operational outcomes reported by exception. The second was to have specific ‘deep dives’ into key strategic issues, including both risks and opportunities. Both have been adopted by the Board. Since the Company joined the AIM market in August 2016, there has been an evolution in the Board’s composition, with the most recent changes to the directorate being in April 2018. While there is no formal succession plan in place, three Managing Directors run the Group’s brands and two of these individuals sit on the parent company Board. All three are experienced operators of franchised businesses and whilst it is not our plan to consolidate these businesses any further, we have significant resilience in our senior management team. QCA PRINCIPLE 8 Promote a value-based corporate culture Franchise Brands has five guiding principles that inform the way we work with each other, support our franchisees and serve our customers and the communities in which we operate: • We demand integrity: We are professional in everything we do and treat people with respect. Nothing is more important to us than acting with integrity at all times. • We empower our people: We empower our people and expect them to take ownership of a situation and to be accountable for their actions and the results they generate. • We are challenging of ourselves: We set high standards, are demanding of ourselves, are prepared to challenge the norm and have a relentless focus on continual improvement. • We are fair: We consider that fairness and transparency are essential to creating high trust working relationships with each other, and with our franchisees, partners and suppliers. • We work as a team: We place a huge amount of importance on teamwork between our colleagues and our franchisees in creating a dynamic business which delivers impressive results. We are inclusive, encourage ideas and innovation and welcome diversity. An externally conducted survey has been undertaken to ascertain the views and attitudes of the franchisees of Metro Rod, the Group’s largest business. This included a number of questions providing insights into the culture within that business and the Board has discussed the survey’s findings.